Efficiency ratio: The efficiency ratio is how many cents a bank spends on overhead to produce one dollar of revenue.
How it is calculated
Noninterest expense divided by the sum of net interest income and noninterest income, for the quarter, on the call report as filed. No adjustment is made for securities gains or one off items.
Formula
Efficiency ratio = noninterest expense / (net interest income + noninterest income)
What banks reported in Q2 2026
Across every bank that filed for Q2 2026, the median efficiency ratio was 61.81%, with the middle half between 53.08% and 72.18%. The right comparison is almost always the row for the bank’s own size rather than the industry line.
| Bank size (total assets) | Bottom quartile | Median | Top quartile |
|---|---|---|---|
| Under $100M | 58.71% | 70.24% | 83.19% |
| $100M - $300M | 54.22% | 63.23% | 73.35% |
| $300M - $1B | 52.96% | 61.02% | 70.35% |
| $1B - $3B | 51.64% | 60.78% | 69.49% |
| $3B - $10B | 48.66% | 56.56% | 63.81% |
| $10B - $100B | 49.08% | 55.70% | 61.47% |
| Over $100B | 51.31% | 55.08% | 63.36% |
Source: BankingLens, computed from FFIEC call reports for the quarter ending June 30, 2026. Quartiles are calculated across the full population of filing banks in each size band, not sampled. Non-insured non-deposit trust companies are left out of every statistic: they take no deposits and make no loans, so a margin or a funding cost computed for them has no meaning.
How to read it
Lower is better, and this is the closest thing banking has to a single operating leverage number. The popular rule that under 50% is good describes large banks only. A core processing system, a BSA officer, an audit relationship, cybersecurity tooling, a board and an examination cost roughly the same at $80 million in assets as at $8 billion, so small banks run structurally higher and the right comparison is the row for the bank’s own size.
The common mistake. Reading it as a cost number. Revenue sits in the denominator, so a quarter of margin compression worsens the ratio with expenses flat, and a large securities gain improves it with nothing managed at all.
Go deeper
- What is a good efficiency ratio for a bank?
- BankingLens pricing and what a subscription adds: percentile rank against the bank’s own FFIEC peer group, fourteen quarters of trend, and the flags an examiner reaches for first.
See also. Noninterest expense, Noninterest income, Net interest income, Return on assets.
Every figure on this page is computed from FFIEC call reports for the quarter ending June 30, 2026 and is not modeled, estimated or sampled. This page is generated by _tools/seo/build_glossary.mjs and carries no figure that was typed in. See our methodology and disclaimer. Definitions are general guidance, not regulatory or investment advice.